Tue, January 22, 2008 — CIO — Wal-Mart and other large retailers have been a major driving force behind radio frequency identification (RFID) adoption, causing it to be viewed merely as a more effective alternative to bar codes where it saves billions through reduced labor costs, out-of-stock expenses, theft, warehouse management costs and inventory levels. However, improvement in supply chain identification may only be the tip of the RFID iceberg—billions of dollars in the form of new business opportunities may lie beneath the waterline.

For example, the Advanced Research Projects Agency Network (ARPANET), the predecessor of Internet, was conceived with a modest goal of improving communication between computers. Who could have guessed back in the 1960s that ARPANET would lay the foundation for today's $140 billion e-commerce industry?

Similar to the way ARPANET laid that foundation a half-century ago, Auto-ID Labs and EPCglobal, two research organizations, are currently developing standards that can lay the foundation for a network that significantly extends the boundaries of today's Internet. With RFID, not only computers, but virtually any object—be it a human, animal, electronic device or lifeless object—can become a node of a global network. This "Internet of Things" may offer lucrative opportunities to those who can look beyond today's mainstream application of RFID—supply chain identification.

Current Examples of Innovative RFID Applications

While probably no one knows what exactly RFID may offer in the future, certain patterns of innovation adoption tend to remain fairly consistent. One of these patterns is that revolutionary applications of technologies are not likely to originate from companies like Wal-Mart. According to Clayton Christensen's theory of innovation, large, well-established companies tend to adopt innovations in a way consistent with their existing resources, processes and values. This holds true in Wal-Mart's case; it adopted RFID consistent with its discount retailer model: RFID is used to reduce costs associated with existing supply chain inefficiencies. It is smaller, emerging companies that tend to use technology in an innovative way, hoping to create new markets for themselves. Today, there are already examples of smaller companies creating innovative RFID applications outside of supply chain identification:

Seattle's cafes and retail stores use RFID technology for marketing products and services At the core of this new marketing advertisement system are the so-called "activation fields" (areas covered by the field of an RFID reader) and active RFID tags that are carried by customers. Whenever a customer enters an activation field, loudspeakers broadcast a commercial message. The system can also display a video message on a monitor with commercial information for cafes or local retailers. One of the primary target audiences for this new system are visually and hearing-impaired individuals.
—Computerworld

Exploratorium, a science museum in San Francisco, uses an RFID-based system called eXport for enhancing visitor experience. At the entrance to the museum, each customer receives an RFID tag in the form of a necklace. When a customer interacts with a particular exhibition stand (sprays water onto a refrigerated glass to form and explore ice crystals, for example), the customer's RFID tag triggers digital cameras that take pictures of the customer and the ice crystals that he or she has created. These pictures are uploaded to a customized website together with the related text information. The website can be viewed by the customer in his or her spare time.
—ACM Portal

Negone, a Madrid-based developer of interactive games, opened a game named "La Fuga" (The Breakout) at the premises of a former bank in Madrid. The game simulates experiences of an inmate escaping a high-security prison. Each person wishing to participate in this game is supplied with a personal digital assistant (PDA) and an RFID tag. RFID readers are placed in doorways and other areas in the former bank's premises. The game system is able to identify gamers and enhance their gaming experience: By detecting users' RFID tags, the system can display questions on the gamer's PDA and also open doors for them.
—RFID Journal